United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

Mark One

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

      For the quarterly period ended March 31, 2005

Or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

      For the transition period from ___________ to ___________

 

Commission File Number:  _0-10972_

_________________________First Farmers and Merchants Corporation________________________

(Exact name of registrant as specified in its charter)

_____________________Tennessee_____________________        ___________62-1148660__________

                     (State or other jurisdiction of incorporation or organization)          (I.R.S. Employer Identification No.)

                                    816 South Garden Street

_________      ___Columbia, Tennessee____________      __________38402 - 1148__________

                                   (Address of principal executive offices)                                      (Zip Code)

___________________________________(931) 388-3145____________________________________

(Registrant's telephone number, including area code)

_________________________________Not Applicable____________________________________

(Former name, former address and former fiscal year, if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   X     No      

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).   Yes  __X__    No  _____

     Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.   __5,840,000 shares as of April 30, 2005__

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements.

The following unaudited consolidated financial statements of the Registrant and its subsidiary are included in this Report:

Consolidated balance sheets - March 31, 2005, and December 31, 2004.

Consolidated statements of income - For the three months ended March 31, 2005, and March 31, 2004.

Consolidated statements of cash flows - For the three months ended March 31, 2005, and March 31, 2004.

Selected notes to consolidated financial statements.

The accompanying notes are an integral part of the consolidated financial statements.

     The accompanying notes are an integral part of the consolidated financial statements.                                      

                                                                                                                                                                     

SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - OTHER INFORMATION

The unaudited consolidated financial statements have been prepared on a consistent basis and in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.  These adjustments were of a normal, recurring nature and consistent with generally accepted accounting principles.  For further information, refer to the consolidated financial statements and footnotes included in First Farmers and Merchants Corporation's annual report on Form 10-K for the year ended December 31, 2004.

NOTE 2 - STOCK DIVIDEND

At the Annual Shareholders' Meeting on April 20, 2004, the Corporation announced a two-for-one stock split effected as a 100% stock dividend payable to shareholders of record as of April 20, 2004.  The Corporation issued an additional share of common stock for each share of common stock outstanding, which resulted in 5,840,000 shares of common stock issued and outstanding at a par value of $10 per share.  The transaction was recorded as a transfer from retained earnings to common stock in the amount of $29,200,000 ($10 for each additional share issued).  All per share and share data in the accompanying consolidated financial statements and footnotes have been restated to give retroactive effect to this transaction.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this report may not be based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as "believes," "may," or "will," or the negatives of such terms.  We caution you not to place undue reliance on such forward-looking statements in this report because results could differ materially from those anticipated due to a variety of factors.  These factors include, but are not limited to, changes in economic conditions; fluctuations in prevailing interest rates and the effectiveness of our risk monitoring systems; the ability of our borrowers to repay loans; adverse changes in our special mention credits; our ability to sell available-for-sale securities to fund increased loan demand; our ability to meet regulatory capital adequacy requirements; our ability to meet liquidity needs from operating activities; the accuracy of assumptions in our rate risk analysis; our ability to recognize deferred tax assets; our ability to maintain credit quality; our ability to provide market competitive products and services; laws and regulations affecting financial institutions in general; and other factors generally understood to affect the financial results of financial services companies.

EXECUTIVE OVERVIEW

At March 31, 2005, the consolidated total assets of First Farmers and Merchants Corporation (the "Corporation") were $822,238, its consolidated net loans were $434,290, its total deposits were $706,433, and its total shareholders' equity was $104,589.  First Farmers and Merchants National Bank's (the "Bank") loan portfolio declined $6,721 or 1.5% during the first quarter of 2005; however, the portfolio increased $25,308 or 6.1%, compared to March 31, 2004.  The retail portion of the portfolio experienced an increase for the first quarter of 2005 while the commercial portfolio saw a decline of 3.6% compared to March 31, 2004.  Several factors led to the decline in loans during the first quarter, including continued stagnation in commercial loan volume and the payoff of several large commercial loans, including a large classified relationship, and the sale of a large classified loan.  Total deposits increased $12,578 or 1.8% during the first quarter.  Shareholders' equity increased 0.38% in the first quarter of 2005.  Shareholders' equity, not including accumulated other comprehensive income, increased 2.0% in the first quarter of 2005.  Total shareholders' equity includes an unrealized loss on available-for-sale securities of $1,124 and increased 0.4%.

MATERIAL CHANGES IN FINANCIAL CONDITION

Average earning assets for the three months ended March 31, 2005 were down 0.7% from average earning assets at December 31, 2004.  A decline in loan volume in the first quarter of 2005 occurred near the end of the quarter; however, average loans were up $17,612 or 4.2% during the quarter.  At March 31, 2004, average net loans decreased 7.7% from December 31, 2003.  Average overnight investments were down $1.7 million or 23.3% at March 31, 2005 compared to December 31, 2004, which was attributable to loan volume.  Average investment securities at March 31, 2005 were down 7.0% compared to the average at December 31, 2004.  Average total assets of $817 million at March 31, 2005 decreased 1.0% compared to an average of $825 million at December 31, 2004.

Securities

Available-for-sale securities are an integral part of the asset/liability management process for the Bank.  Accordingly, they represent an important source of liquidity available to fund loans and accommodate asset reallocation strategies dictated by changes in the Bank's operating and tax plans, shifting yield spread relationships, and changes in configuration of the yield curve.  At March 31, 2005, the Bank's investment securities portfolio had $219.0 million available-for-sale securities and $79.5 million held-to-maturity securities.  There were $226.8 million available-for-sale securities and $76.3 million held-to-maturity securities at December 31, 2004.  The decrease in available-for-sale securities resulted from investing in the loan portfolio funds received as securities matured.  The Bank may sell available-for-sale securities as funding for planned increased loan demand as needed.  No investment securities were sold in the first quarter of 2005.

 

Loans

The loan portfolio is the largest component of earning assets for the Bank and, consequently, provides the highest amount of revenues for the Corporation.  The loan portfolio contains the highest exposure to risk as a result of the possibility of unexpected deterioration in the credit quality of borrowers.  When analyzing potential loans, management assesses both interest rate objectives and credit quality objectives in determining whether to make a given loan and the appropriate pricing for that loan.  Concentrations within the Bank's loan portfolio exist.  First mortgage loans, secured by one to four family residential properties, represent 38% of the total loan portfolio.  The Bank recognizes this concentration, but finds the risk acceptable given the quality of underwriting and low level of historical loss experience.  Mortgage loans secured by commercial properties comprise 21% of the portfolio and have a higher level of risk and historical loss experience than residential mortgage loans.  There is not an industry concentration as measured by regulatory guidelines.  However, the Bank does have heavy exposure among six broad industry categories which include construction, manufacturing, real estate renting and leasing, other services (churches), and public administration.  These industries are monitored closely to ensure that underwriting practices, policies and loss allowance levels match the level of risk posed.  All loans are expected to be repaid from cash flow or proceeds from the sale of selected assets of the borrowers.  Collateral requirements for the loan portfolio are based on credit evaluation of the loan customers.

The analysis and review of asset quality by the Bank's credit administration includes a formal review that evaluates the adequacy of the allowance for possible loan losses.  This review is updated monthly and evaluated more completely quarterly in conjunction with loan review reports and evaluations that are discussed in meetings with loan officers, credit administration, and the Board of Directors.  This evaluation supported a reversal of specific allocations in the allowance during the first quarter of 2005 as a result of the resolution of certain problem loans associated with those specific allocations.  Credit quality continued to improve during the first quarter as indicated by declines in the volume of loans with past due payments and potential problem loans.  The allowance for possible loan and lease losses was $8.0 million or 1.8% of gross loans at March 31, 2005.  This compares to $8.5 million or 1.9% at December 31, 2004.  Net recoveries for the first quarter of 2005 were $329,000.  Net charge-offs for the first quarter of 2004 were $153,000, an annualized net charge-off ratio of 0.15%.

A formal process is in place to provide control over underwriting of loans and monitor their collectibility.  This process includes education and training of personnel on the Bank's loan policies and procedures, credit analysts to support lenders, timely identification of loans with adverse characteristics and control of corrective actions, and objective monitoring of loan reviews.  A Special Assets Department of the Bank identifies and monitors assets that need attention.  At March 31, 2005, this process identified loans totaling $6.9 million, or 1.6% of the portfolio, that were classified as other assets especially mentioned.  This compares to loans totaling $12.8 million so classified at March 31, 2004.  Loans totaling $7.0 million, 1.6% of the portfolio, were classified as substandard at March 31, 2004.  This compares to loans totaling $17.5 million so classified at March 31, 2004.  Loans totaling $0.9 million or 0.20% of the portfolio were classified as doubtful at March 31, 2005.  This compares to $0.7 million so classified at March 31, 2004.  Loans having recorded investments of $0.7 million, or 0.2% of the total portfolio, were identified as impaired at March 31, 2005 compared to $1.2 million at March 31, 2004.  These improvements in the first quarter of 2005 are indicators of the continued improvement in credit quality.

During the first three months of 2005, there were no write downs of other real estate associated with declines in real estate values subsequent to foreclosure and disposition of the properties at less than their carrying value that were charged to current income.  The carrying value of other real estate is included in other assets on the balance sheet and represents real estate acquired through foreclosure and is stated at the lower of cost or fair value minus cost to sell.  An allowance for other real estate owned is not maintained.  Any decreases or losses associated with the properties have been charged to current income.

Deposits

            The Bank does not have any foreign offices and all deposits are serviced in its twenty domestic offices.  The Bank's average deposits declined 1.6% during the first three months of 2005 compared to a decline of 5.4% in the first three months of 2004.  The primary reason for the decrease in 2004 is that the Bank reduced its reliance on short-term large dollar certificates of deposit in 2004 and made the strategic decision to be more aggressive in pricing these deposits in the first quarter of 2005.  Average total noninterest-bearing deposits were 16.5% of total deposits at March 31, 2005, contributing to the Bank's low cost of deposits.  This compares to 15.8% at March 31, 2004.

Regulatory Requirements for Capital

The Corporation and the Bank are subject to federal regulatory risk-adjusted capital adequacy standards.  Failure to meet capital adequacy requirements could result in certain mandatory, and possibly additional discretionary, actions by regulators that could have a direct material effect on the consolidated financial statements of the Corporation and its subsidiary, the Bank.  The regulations require the Bank to meet specific capital adequacy guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  The capital classification is also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

            Quantitative measures established by regulation to ensure capital adequacy require the Corporation and the Bank to maintain minimum amounts and ratios of Total Capital and Tier I Capital to risk-weighted assets and of Tier I Capital to average assets.   Equity capital (net of certain adjustments for intangible assets and investments in non-consolidated subsidiaries and certain classes of preferred stock) is considered Tier 1 ("core") capital.  Tier 2 ("total") capital consists of core capital plus subordinated debt, some types of preferred stock, and a defined percentage of the allowance for possible loan losses.  As of March 31, 2005, the Corporation's total risk-based and core capital ratios were 19.6% and 18.3%, respectively.  The comparable ratios were 19.6% and 18.4% at year end 2004.  As of March 31, 2005, the Bank's total risk-based and core capital ratios were 19.8% and 18.6%, respectively.  As of March 31, 2005, the Corporation and the Bank had a ratio of core capital to average total assets ratio of 11.5% and 11.4%, respectively, compared to 11.3% and 11.1% at December 31, 2004.  Management believes, as of March 31, 2005, that the Corporation and the Bank meet all capital adequacy requirements to which they are subject.

Liquidity and Capital Resources

            Most of the capital needs of the Bank have historically been financed with retained earnings and deposits received and the Corporation's primary source of liquidity is dividends declared by the Bank.  The Corporation and the Bank do not have any long-term debt and do not have major plans for capital expenditures in the near future.  The Corporation's average shareholders' equity at March 31, 2005 was $104.5 million, a 0.64% increase from the average at December 31, 2004.  The approval of the Office of the Comptroller of the Currency ("OCC") is required before the Bank's dividends in a given year may exceed the total of its net profit (as defined by the OCC) for the year, combined with retained net profits of the preceding two years.  As of March 31, 2005, the Bank could have declared additional dividends of approximately $12.8 million without regulatory agency approval.  The Bank did not declare a dividend in the first quarter of 2005.  Management believes that the Corporation's traditional sources of cash generated from the Bank's operating activities are adequate to meet the Corporation's liquidity needs for normal ongoing operations.  The Bank's Board of Directors adopted a liquidity policy that outlines specific liquidity target balances.  The formal review of compliance with this policy is monitored quarterly by the Bank's Asset/Liability Committee and results are reported to the Board of Directors.

The Bank maintains a formal asset and liability management process to control interest rate risk and assist management in maintaining reasonable stability in the gross interest margin as a result of changes in the level of interest rates and/or the spread relationships among interest rates.  The Bank uses an earnings simulation model to evaluate the impact of different interest rate scenarios on the gross margin.  Each month, the Asset/Liability Committee of the Bank monitors the relationship of rate sensitive earning assets to rate sensitive interest bearing liabilities (interest rate sensitivity) which is the principal factor in determining the effect that fluctuating interest rates will have on future net interest income.  Rate sensitive earning assets and interest bearing liabilities are financial instruments that can be repriced to current market rates within a defined time period.

Critical Accounting Policies

The accounting principles the Bank follows and the methods of applying these principles conform with accounting principles generally accepted in the United States of America and with general practices within the banking industry.  In connection with the application of those principles, the Bank's management has made judgments and estimates that, in the case of the determination of the allowance for loan losses ("ALLL") and the recognition of deferred income tax assets, have been critical to the determination of the Bank's financial position, results of operations, and cash flows.

Allowance for Loan Losses

           Management assesses the adequacy of the ALLL prior to the end of each month and prepares a more formal review quarterly to assess the risk in the Bank's loan portfolio.  This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance.  The ALLL represents calculated amounts for specifically identified credit exposure and exposures readily predictable by historical or comparative experience.  Even though this calculation considers specific credits, the entire allowance is available to absorb any credit losses.

           These calculated amounts are determined by assessing loans identified as not in compliance with loan agreements.  These loans are generally in two different risk groups.  One group is unique loans (commercial loans, including those loans considered impaired).  The second group is homogenous loans (generally retail loans).  The calculation for unique loans is based primarily on risk rating grades assigned to each of these loans as a result of our loan management and review processes.  Each risk-rating grade is assigned a loss ratio, which is determined based on the experience of management, discussions with banking regulators, and the independent loan review process.  The amount allocated for impaired loans is based on estimated cash flows discounted at the loan's original effective interest rate or the underlying collateral value.  Historical data, including actual loss experience on specific types of homogenous loans, is used to allocate amounts for loans or groups of loans meeting the specified criteria.  More detailed historical data is being accumulated by category of consumer credit and performance characteristics to broaden the analysis and improve monitoring of potential credit risk.

     Criteria considered in evaluating the adequacy of the ALLL are:

•         Portfolio quality trends;

•         Changes in the nature and volume of the portfolio;

•         Present and prospective economic and business conditions, locally and nationally;

•         Management review systems and board oversight, including external loan review processes;

•         Changes in credit policy, credit administration, portfolio management and procedures; and

•         Changes in personnel, management, and staff. 

           In assessing the adequacy of the ALLL, the risk characteristics of the entire loan portfolio are evaluated.  This process includes the judgment of management, input from independent loan reviews, and reviews that may have been conducted by bank regulators as part of their usual examination process.

Deferred Income Tax Assets

Deferred income tax assets consist mainly of the tax effect of excess provisions for loan losses over actual losses incurred and deferred compensation.  The Corporation and the Bank have paid taxes for many years.  Management believes that it is more likely than not that these assets will be realized in future years.

OFF-BALANCE SHEET ARRANGEMENTS

The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit and standby letters of credit.  Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet.  The contract or notional amounts of those instruments reflect the extent of involvement the Bank has in those financial instruments.  The total outstanding loan commitments and stand-by letters of credit in the normal course of business at March 31, 2005, were $67.9 million and $6.7 million, respectively.  These totals compare to $67.8 million outstanding loan commitments and $5.6 million stand-by letters of credit in the normal course of business at March 31, 2004.  Loan commitments are agreements to lend to a customer as long as there is not a violation of any condition established in the contract.  Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party.  Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions.  The credit risk involved in issuing letters of credit is essentially the same as that involved in making a loan.

At March 31, 2005 and December 31, 2004, the Corporation and the Bank did not have any off-balance sheet arrangements other than commitments to extend credit and stand-by letters of credit.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

Total interest income for the first three months of 2005 was $9,394 compared to $9,442 for the first three months of 2004.  Interest and fees earned on loans and investments are the components of total interest income.  Interest and fees earned on loans increased 5.3% during the first quarter of 2005 compared to the first quarter of 2004 as a result of the increase in the volume of average loans.  Interest earned on investment securities and other investments decreased 10.8% during the first three months of 2005 compared to the first three months of 2004 as a result of the reduced volume of investment securities and higher yielding investments maturing and being replaced with investments at lower yields.

            Total interest expense in the first three months of 2005 did not change appreciably compared to the first three months of 2004.  As a policy, budgeted financial goals are monitored on a monthly basis by the Asset/Liability Committee which reviews the actual dollar change in net interest income given different interest rate movements.  A negative dollar change in net interest income for a twelve-month period of less than 4.5% of net interest income given a three hundred basis point shift in interest rates is considered an acceptable rate risk position.  The rate risk analysis for the twelve-month period beginning April 1, 2005 and ending March 31, 2006 showed a worst-case potential change to net interest income of a negative 1.9%, or a decline in net interest income of $560,100.

            Net interest income of the Corporation on a fully taxable equivalent basis is influenced primarily by changes in:

(1)                the volume and mix of earning assets and sources of funding;

(2)                market rates of interest; and

(3)                income tax rates.

The impact of some of these factors can be controlled by management policies and actions.  External factors also can have a significant impact on changes in net interest income from one period to another.  Some examples of such factors are:

(1)                the strength of credit demands by customers;

(2)                Federal Reserve Board monetary policy; and

(3)                fiscal and debt management policies of the federal government, including changes in tax laws.

The net interest margin, on a tax equivalent basis, at March 31, 2005, March 31, 2004, and December, 31, 2004 was 4.13%, 4.11%, and 4.13%, respectively.

            No additions were made to the allowance for loan losses in the first quarter of 2005 or the first quarter of 2004.  A credit was taken as of February 28, 2005, in the amount of $796,000 based upon unexpected loss recoveries and substantial reductions in the level of criticized assets during the period.

            Noninterest income decreased 32.7% during the first three months of 2005 compared to the first three months of 2004.  This decrease resulted from:

(1)    A decline in the level of overdrawn account service fees;

(2)    There were no gains on the sale of available-for-sale securities to compare to the $917 gain on the sale of available-for-sale securities in the first quarter of 2004.

Noninterest expenses, excluding the provision for possible loan losses, were 0.6% more in the first three months of 2005 than in the first three months of 2004.  The increase is a result of salary increases in 2005.

The Corporation and the Bank do not have any long-term debt or other obligations with the exception of certain operating leases.  There has not been a change in these operating leases

Net income for the first quarter of 2004 was $2.08 million compared to $2.46 million for the first quarter of 2004.  The Corporation earned $0.36 per share in the first quarter of 2005 and $0.42 per share in the first quarter of 2004.  The gain on the sale of available-for-sale securities in the first quarter of 2004 contributed to the higher earnings per share in the first quarter of 2004.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

During the quarter ended March 31, 2005, there were no material changes in the quantitative and qualitative disclosures about market risk presented in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2004.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures.  The Corporation carried out an evaluation, under the supervision and with the participation of management, including the Corporation's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Corporation's disclosure controls and procedures as of the end of the period covered by this report pursuant to Exchange Act Rule 13a-15.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Corporation's disclosure controls and procedures were effective in ensuring that information required to be disclosed by the Corporation (including the Corporation's consolidated subsidiaries) in reports that the Corporation files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported in a timely manner.

(b) Changes in Internal Control Over Financial Reporting.  There has been no change in the Corporation's internal control over financial reporting that occurred during the first quarter of 2005 that has materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

PART II - OTHER INFORMATION

 

Item 6.  Exhibits and Reports on Form 8-K.

(a) List of Exhibits:

EXHIBIT

NUMBER          DESCRIPTION

     3.1     Charter. (a)

     3.2     Articles of Amendment to Charter. (a)

     3.3     By-laws. (a)

     3.4     Amendment to By-laws.

     4.1     Form of Specimen Stock Certificate. (a)

    31.1    Certification of the Chief Executive Officer of First Farmers and Merchants Corporation Pursuant to Rule 13a-14(1) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

    31.2    Certification of the Chief Financial Officer of First Farmers and Merchants Corporation Pursuant to Rule 13a-14(1) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

    32.1    Certification of the Chief Executive Officer and Chief Financial Officer of First Farmers and Merchants Corporation Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

_________________

(a)    Incorporated by reference from the First Farmers and Merchants Corporation Amendment No. 1 to the Annual Report on Form 10-K/A for the year ended December 31, 2003, File Number 0-10972, as files with the Securities and Exchange Commission on may 7, 2004.

(b)    Incorporated by reference from the First Farmers and Merchants Corporation quarterly Report on Form 10-Q for the quarter ended March 31, 2004, File Number 0-10972, as filed with the Securities and Exchange Commission on May 10, 2004.

(b) Reports on Form 8-K:

On March 21, 2005, the Corporation furnished a Current Report on Form 8-K, pursuant to Item 8, announcing that its wholly-owned subsidiary, First Farmers and Merchants National Bank, has filed an application to convert the Bank from a national banking association to a Tennessee state chartered bank..

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FIRST FARMERS AND MERCHANTS CORPORATION

(Registrant)